Dawie Roodt’s 2024 Budget expectations 

Dawie Roodt

Efficient Group chief economist Dawie Roodt said there will likely not be any significant tax increases announced in the 2024 February Budget.

He added that the political pressure of an election year means the government will be reluctant to cut back on spending.

Roodt told Daily Investor that the context of this year’s Budget – set to be presented by Finance Minister Enoch Godongwana on 21 February – is very important.

Firstly, South Africa’s fiscal finances are currently under tremendous pressure. 

“We have never seen the fiscal situation as bad as it is. It’s really bad – fiscal debt levels have reached record-high levels, and we simply cannot afford to spend more money,” he said.

Secondly, Roodt said that 2024, an election year, “makes life very difficult for the Minister of Finance”.

Godongwana must implement certain cost-cutting measures to stabilise the fiscal accounts and battle this massive deficit.

However, “he can’t do it before an election for political reasons”, Roodt explained. “So, he’s certainly not going to cut back on certain expense items.”

South Africa’s 2024 Budget will likely reveal a larger-than-projected deficit as the marked fiscal slippage seen in November last year becomes entrenched.

Investec chief economist Annabel Bishop said South Africa’s government is facing a deficit of around R347 billion for the 2023/24 financial year – over 40% more than the previous year.

This is due to government spending significantly outpacing income and lower-than-expected tax revenue in 2023.

Enoch Godongwana
Enoch Godongwana

When it became clear at the end of 2023 that the government would face such a significant deficit, the National Treasury presented President Cyril Ramaphosa with a cost-saving plan.

However, this was met with fierce opposition, with Ramphosa himself saying, “Instilling discipline is as important as taking decisive steps to grow the economy.” 

“Fiscal discipline is not the same as imposing austerity measures that will undermine our developmental agenda,” he said.

“Accordingly, the NEC encourages the government to continue implementing structural reforms, particularly in energy and logistics.”

Roodt explained that South Africa has not had austerity in a very long time. 

“Just look at the fiscal deficit. We’ve got a very large fiscal deficit. We’ve got a fiscal deficit of between 5% and perhaps even as much as 8% of GDP while the economy is growing at less than 1%,” he said. 

“That certainly is not an austere budget – that is a highly expansionary budget.” 

Roodt also believes the Finance Minister will not implement major tax increases to make up for the deficit and the government’s reckless spending.

“I do not expect the Minister of Finance to make any major adjustments. Maybe here and there, small things like bracket creep on personal income taxes,” he said. 

“But personal income taxes, value-added tax, and company taxes are unlikely to be changed.” 

However, he said it is possible that the withholding tax in companies or other smaller taxes like sin taxes or the fuel levy could be increased.

“Although the Minister of Finance did indicate he needs about R15 billion or so extra money, he could probably get that from the smaller taxes,” Roodt said. 

“I don’t think he will increase something like, for example, value-added tax. That is politically a no-go.”

“In the case of personal income taxes and company taxes, if you increase that, you’re probably gonna lose more money than what you’re gonna get in.”


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